Daily Currency Update
CAD - Canadian DollarConcerns surrounding a coronavirus resurgence pushed investors toward haven assets. As such markets appeared reluctant to extend gains across commodity currencies and risk assets. The Canadian dollar was relatively flat in yesterday’s trading but this morning it pushed to a 7-day high.The US dollar crept higher through trade on Thursday when measured against a basket of major counterparts, up two tenths of a percent and closing in on four-week highs. The rapid spread of new infections across a swathe of US states, with Texas and North Carolina forced to suspend plans to re-open their economies and instead impose new measures to try and control their respective outbreaks, has prompted investors to begin re-assessing expectations for a prompt rebound in economic activity. Activity through the short-term is likely to be muted and the recovery process slowed. This fact is beginning to weigh on investors. We are seeing a sustained risk-off shift, and the USD will likely find renewed short-term demand as markets unwind risk plays.
Key Movers
The GBP is lower this morning after the UK’s Chief Brexit negotiator refused to agree to a compromise on tariffs. While the focus remains largely with the battle against the coronavirus, there is still a long way to go before the UK leaves the EU at the end of the year and further delays/setbacks in divorce negotiations are adding further downward pressure on the GBP. Having slipped below 1.24, the GBP appears well supported on moves approaching 1.2350 for now, but a selloff in risk could prompt a move back toward 1.22 and 1.20.The Euro also experienced a tough day of trading yesterday with EUR/USD falling to an intraday low of 1.1205. Aside from the US’ tariff threat on the EU, the ECB Monetary Policy meeting minutes, released yesterday, suggest there’s no exit from Quantitative Easing anytime soon. The minutes also indicate policymakers see weakening price pressures, downside growth risks and weak demand. As such it’s likely we will see further downside for the single currency in the short term.On a lighter note, the Australian dollar crept higher through Thursday following the news that Australia saw its largest drop ever in job vacancies for the 3 months up to May. The AUD gains were marginal however as investor attentions remain squarely affixed to the largely unchecked spread of COVID-19 throughout the US, Latin America and South Africa.
Expected Ranges
- USD/CAD: 1.349 - 1.371 ▼
- GBP/CAD: 1.689 - 1.695 ▼
- EUR/CAD: 1.529 - 1.536 ▼